i don’t understand this…. because of the investment required to bring new sources to market, i’d think that would mean that cycles of boom and bust would be the natural market (wo intervention) results?

ah, i had assumed that modern energy markets were subject to intervention and so could not be used as evidence of what unmanipulated markets do. my thinking was very simplistic and based on an intuition influenced by practical systems process eng (not economics, not energy). goes sorta like this: a perturbation from a steady state, if large enough, would affect investment in bringing new sources to market (exploration, drilling, building pipelines, refineries – all that), but importantly with a time lag. for example: in the case of a recession: demand goes down, so prices go down, so investment goes down. because investments in this market are costly and take time to come on line, this would tend to limit the ability of supply to respond to increasing demand when the recession ends. there could be an unlimited supply of oil – but unless it shows up at the gas station it’s not a supply to the demand for gasoline. so prices go up which stimulates investment, the longer the lead time of investment to bringing product to market, the more the prices will overshoot. the more the price overshoots the more investment. the more investment, the more likely supply is to overshoot which then brings down prices and the whole thing repeats in reverse on the downside. it all depends on the time lag (and stupidity of people making investment decisions).

but obviously, i have no clue how it actually works.

Rep. Henry Waxman (Calif.) has ousted Energy and Commerce Chairman John Dingell (Mich.), as Democratic lawmakers voted 137-122 Thursday morning to hand the gavel of the powerhouse panel to its second-ranking member.

The vote marks a stunning rebuke of the seniority system Democrats have honored for decades. It also constitutes a win, of sorts, for Speaker Nancy Pelosi (D-Calif.), who is ideologically aligned with Waxman and has clashed repeatedly with Dingell.

Me likey!

Shucks. I had a whole long comment typed & went to check the article BR linked, forgetting I would lose what I typed.

Let me try to do it again.

Because so many different influences are important in determining oil prices, my anchor is the long periods when they are stable. That’s why the 1990s is key. Oil demand & supply both rose rapidly and prices were stable. That suggests, selise, that large price fluctuations are not inherent in balancing supply/demand. They may be at some point. I look only at macro, so am only vaguely aware of where new supply is, at what price it is profitably extractable, and how long til it comes onstream. I did hear such an expert last July and his forecast was wrong and mine was much better.

BR, large fluctuations in prices have ripple effects that can last for a long time. Article writers break in at some arbitrary point, as if there was no yesterday and no lessons had been learned from history & go for there. Also, institutionally, reporters have a hard time getting articles published which are countertrend. So articles like the one you linked are another factor exascerbating the cycle.